The Clean Tech Industry’s Stake in California on November 2nd

The oil and gas interests that are behind Proposition 23 on the November 2nd ballot in California are faltering in the polls. That’s good news for the clean tech sector, but a less well-known ballot measure, Proposition 26, could still help pull the rug out from under California’s efforts to create markets for clean energy and clean transportation systems.

Just as vested special interests protecting the status quo thwarted efforts to pass any meaningful regulations on carbon and/or to promote renewable energy at the federal level this year, Tea Party activists (working with sympathetic apologists for the fossil fuel industry) are trying to roll back California’s climate change regulations through the much maligned ballot initiative process.

The irony is that Silicon Valley and Hollywood are outspending the out-of-state oil companies behind Proposition 23, which would, in effect, undo AB 32, the Global Warming Solutions Act of 2006 requiring the state to reduce greenhouse gas emissions by approximately 25 percent by 2025. (Since 40 percent of California’s climate change gases are linked to the transportation sector, this ballot measure could have a crippling impact on emerging markets for plug-in electric vehicles.)

Prop 23 would suspend the nation’s most aggressive climate change law until unemployment (currently standing at above 12 percent) drops to 5.5 percent for four consecutive quarters. That low of a level of unemployment has only occurred three times over the last four decades.

Recent reports on campaign spending show that Pacific Gas & Electric (PG&E), which was a prime mover behind AB 32, has pumped $250,000 into the “No on Prop 23” campaign. Another notable financial supporter of this effort to protect environmental regulation is Gordon Moore, the legendary co-founder of Intel, who has contributed $1 million to the same effort.

The prime funding sources behind Prop 23 are Tesoro and Valero, both oil companies hailing from Texas, and the infamous billionaires Charles and David Koch, who own oil refineries in Alaska, Texas and Minnesota. At present, the pro Prop 23 interests are being outspent at a rate of 3-to-1, $30 versus $10 million. Despite the economic doldrums facing the nation and state, recent polls show that 48 percent of voters oppose Prop 23, while only 37 percent support it (with the rest still undecided.)

Of course, the battle might not be over on November 2nd. Attorneys general from Alabama, Nebraska, North Dakota and Texas claim they will go to the court if voters reject the measure, basing their legal arguments on the Constitution’s interstate commerce clause. In lawsuits where states are the opposing litigants, the Supreme Court has original jurisdiction. That means a trial would need to take place at the Supreme Court.

While the clean tech sector may be crowing about their seemingly successful effort to beat back Prop 23, Proposition 26 has largely been under the public’s radar. The outcome of this ballot measure is less certain. It would reclassify environmental impact fees as taxes and then require a 2/3 vote in the California Legislature (rather than a simple majority) to impose them.

The two-thirds voting requirement for passing a state budget has mired the state in an annual fiscal crisis due to gridlock between majority Democrats and the minority Republicans. Environmentalists and their clean tech allies fear passage of Prop 26 could cripple efforts to levy fees to implement the variety of programs designed to reduce greenhouse gas emissions.

Interestingly enough, the prime funders behind Prop 26 are California oil companies that have all dissociated themselves from Prop 23. Chevron, ConocoPhillips and Occidental Petroleum have all ponied up on behalf of Prop. 23. Chevron is the largest single contributor at $3.7 million. In this campaign, proponents have been outspending the opponents at a more than 2-to-1 ratio, with over $16 million versus less than $6 million.

Peter Asmus is an analyst at Pike Research specializing in renewable energy. Article appearing courtesy Matter Network.

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